The complicated finances of flying

The original news story was simple: pampered general uses private government jet for personal trip(s) at total cost of more than $1M to taxpayers over three years. The Prime Minister smelled a scandal and tried to nip it in the bud by suggesting public figures repay personal travel costs.

Fixed vs incremental costs

Unusually for a public figure, however, the general in question actually stood up for himself and decided to treat us like adults and explain how things work. The situation is remarkably similar to the finances of owning a small plane (if you knock a couple of zeros off the end of the dollar values), so it’s worth summarizing here:

  • The $10,000/hour quoted cost is the total cost of ownership, not the incremental cost. The bulk of that is the fixed costs (purchase, maintenance, etc.) divided by flying time. Most of those costs are incurred regardless of whether the government’s two Challenger jets take extra trips. The incremental cost of flying one of the jets (fuel, maintenance based on flight hours, etc.) is $2,360 for each extra hour it flies.

  • The government doesn’t use the jets often enough for the crews to maintain legally-required recency, so they have to do a lot of empty training flights to make up enough hours. Last year, the jets flew 170 hours empty between them to help the crews meet requirements.

So when the press says the general spent $1.5M over three years flying for personal reasons (presumably ~150 hours), the first thing to realize is that that really represents $354,000 in extra incremental costs, or just over $100,000/year — still a lot, but not nearly so shocking (in the late 1990s, my customers spent over $50,000/year more than one year flying me around on the airlines for my consulting work).

Crews have to fly

The second thing to realize is that the pilots have to fly anyway. So imagine an exchange like this:

Jane Pilot: Good morning, sir. My first officer and I need another 8 hours this month to stay current. Instead of our flying in circles around Ottawa practicing approaches, would you like to tag along and go somewhere?

General: Well, captain, my friend gave me tickets for the Calgary Stampede.

Jane Pilot: Perfect — that will be just about right. See you tomorrow morning at 0800, sir.

This conversation will make perfect sense to an aircraft owner, but might be too complicated to explain in the public — we’ll see. I’ve had similar conversations with friends when I’ve needed to make up required hours (a pilot who doesn’t fly often enough isn’t safe, and sometimes isn’t legal). Of course, my incremental operating costs are a lot lower (maybe $70/hour for fuel, oil, and engine depreciation), but who’s counting?

Not the same as a corporate jet

If these were privately-owned corporate jets, of course, they could be leased out when they’re not needed, and the owner would make money and give the crew their hours. These jets, however, are full of sensitive equipment, so that the Prime Minister (for example) can monitor or order military attacks from the air. We probably don’t want a rich developer renting one to fly his gulf buddies to Florida.

It’s also worth mentioning that in at least one case, the jet was offered to the general because he missed the first part of a family on a trip to be present for the return of slain Canadians from Afghanistan. That’s a hard one to object to.

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4 Responses to The complicated finances of flying

  1. Liam Quin says:

    Thanks for an informative post, David!


  2. Art Zemon says:

    Very nicely explained. Thank you

  3. Frank Ch. Eigler says:

    (I missed this story earlier.) I wonder if the pilots could maintain recency in some other less-expensive vehicle – or even a simulator – if their main ride has no other reason to fly.

  4. Gerry Haliburton says:

    I must take issue with the description of the aircraft in question being a “private government jet”. There are 3 categories of civil aircraft in Canada- Private, Commercial, and State. The civilly registered aircraft used by government and military officials are registered under the State category. Describing them as “private” is incorrect. The other mode available to such officials is aircraft operated by DND, which obviously must be described as “military”, since they are not civilly registered. If everyone took care to use proper nomenclature, the picture would be much clearer and more accurate.

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